SA Betting Operator Seeks to Halt Phumelela Business Rescue Plan, Sale
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Struggling South African horse racing and sports betting operator Phumelela Gaming and Leisure has been served with a notice of motion on Monday opposing the company’s proposed business rescue plan and possible sale of some or all of its assets, local news outlets report.
The applicant is understood to be racing and betting operator Gold Circle. According to its founding affidavit, the company claims it owns a 39% stake in Phumelela Gold International, a gambling company registered on the Isle of Man.
Gold Circle argues that it is entitled to claim a transfer of the shares it owns from Phumelela Gaming and Leisure “upon demand.” According to the affidavit, Phumelela business rescue practitioner John Evans has refused to recognize Gold Circle’s 39% stake or entitlement to claim its transfer.
Phumelela has been grappling with heavy financial troubles since at least last year when regulatory changes in the Gauteng province stripped the racing and betting operator from its share of a mandatory 6% levy on winnings from horse race betting.
The suspension of horse racing in South Africa earlier this year due to the Covid-19 pandemic only added to Phimelela’s troubles.
In May, the company suspended trading of its shares on the Johannesburg Stock Exchange and filed for bankruptcy protection. It told investors back then that the only way it could ensure its long-term survival was to implement a business rescue plan.
Rival Acquisition Bids
Mary Oppenheimer Daughters (MOD), a fund operated by South Africa’s wealthiest family, stepped in to help, offering Phumelela a R100 million financial lifeline. MOD also promised additional financing of R550 million to be delivered in three separate tranches.
The fund also offered to purchase some of the operator’s assets. MOD’s offer was included in Phumelela’s original business rescue plan presented by the company in May.
However, the operator said in August that British bookmaker Betfred offered to buy “all assets of Phumelela, and not merely some of the assets as contemplated in the offer made by MOD.” The British company said it would pay between R875 million and R925 million for the South African operator.
Phumelela is set to make a decision on whether it would accept Betfred’s offer at a meeting taking place today, September 1.
However, Gold Circle wants the business rescue plan and the possible sale of Phumelela to be halted pending the final determination of the legal dispute it has initiated.
The operator has named Phumelela, its business rescue practitioner John Evans, MOD, and Betfred in its notice.
Betfred has said that it would abide by any decision made by the court. In a notice to shareholders, Phumelela said Monday night that it would notify all interested parties about the outcome of today’s meeting.
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